Investing in Distressed Businesses

Investors may seek to purchase bankruptcy claims against a debtor as part of an investment strategy. What do they need to know before they invest?

Don’t expect to challenge a 363 sale so easily. Find out why you should pursue other options for purchasing assets from a distressed seller.

A stalking horse bidder makes the first bid in an bankruptcy auction, setting the initial price and structure of the sale– but there are some disadvantages.

Why would a secured creditor prefer to sell its collateral outside of bankruptcy? Here’s how time, money, and control differ in a 363 sale vs Article 9 sale.

Ordinary asset purchase? Article 9 sale? Bankruptcy acquisition? When buying a distressed business, the type of purchase should be top of mind.

Why Sell a Bankruptcy Claim? Imagine this: One of your customers sends you a notice stating it has filed for chapter 7 or chapter 11 bankruptcy protection rather than the payment for goods or services provided that you were expecting. In technical terms, you now have a “claim” against the “debtor,” but you aren’t sure you want to deal with the bankruptcy process and delay only to recover part of what you are owed. When a bankruptcy claims purchaser offers to purchase your bankruptcy claim from you for cash, you […]

New to the bankruptcy claims trading marketplace? Take a close look at documenting the purchase and sale of a bankruptcy claim.

What Distressed Asset Investors Can Glean from Low Interest Rates, Rising Asset Prices and Insolvency on the Horizon DailyDAC readers know that we try to confine ourselves to publishing “evergreen” thought leadership—general education for business owners and investors about business bankruptcy, its alternatives, and related subjects. There isn’t a stark line between the news of the day about the Markets and the Economy, on the one hand, and the world that is our stock and trade. We have, in the past few weeks, had a number of conversations with some […]

With the sharp slowdown in the economy, bank stocks have declined significantly, and, unlike the broad S&P 500 Index, have not recovered much of their lost value.  Year-to-date, our universe of 180 bank stocks has declined 31%, compared to the 6% decline in the broad market. Driving the weak shares are concerns over higher credit losses, particularly in commercial real estate and small/medium business loans.  Banks have begun to increase their reserves, but the extent of further losses is not fully known.  A new accounting rule (Current Expected Credit Losses, […]

When a debtor files for Chapter 11 or Chapter 7 bankruptcy, often a creditor’s only remedy is to wait for a sale or reorganization, the claims resolution process and other actions to be taken before the debtor or trustee can make distribution on the claim.